1990 (10) TMI 363 - SC - Indian Laws

Whether clause (iii) of sub-section (3) of Section 1 of the Jammu 40, 000. Keeping in view the object which the legislation seeks to achieve it can be safely said that there is reasonable nexus between the classification made by the legislature in the impugned section and the object sought to be achieved. We also find that there is an intelligible differentia between the tenants who are sought to be protected by the Act from those who are denied the protection of the Act. Appeal dismissed.

Summary

Issues:
Validity of clause (iii) of sub-section (3) of Section 1 of the Jammu & Kashmir Houses and Shops Rent Control Act, 1966 - Alleged violation of Article 14 of the Constitution.

Detailed Analysis:

The primary issue in this case revolves around the validity of clause (iii) of sub-section (3) of Section 1 of the Jammu & Kashmir Houses and Shops Rent Control Act, 1966, specifically concerning its compliance with Article 14 of the Constitution. The High Court of Jammu & Kashmir had previously upheld the validity of the clause, rejecting the challenge based on alleged discrimination. The clause in question exempts tenancies where the tenant's income exceeds Rs. 40,000 per annum from the protection of the Act. The appellant, a tenant with an income above the specified limit, argued that this provision is discriminatory and arbitrary, as it denies protection to tenants based solely on their income, without considering other relevant factors such as the nature of the building or the landlord's income. The appellant contended that this classification based on income is unintelligible and violates Article 14 of the Constitution. The appellant highlighted the potential for varying income levels and the lack of clarity in defining "net income" as reasons for the provision's invalidity.

The appellant further argued that previous decisions declaring similar provisions unconstitutional, such as in Rattan Arya v. State of Tamil Nadu and Motor General Traders v. State of Andhra Pradesh, are distinguishable from the present case. The appellant emphasized that the classification based on income lacks a reasonable relation to the legislative objective of the Act, which is to protect economically weaker tenants while encouraging new construction. However, the appellant's reliance on these precedents was countered by the respondent, who cited the decision in Kerala Hotel & Restaurant Association v. State of Kerala, where a classification based on financial capacity was upheld by the court.

The Supreme Court, in its analysis, emphasized the principles of permissible classification under Article 14, requiring that the classification must be based on an intelligible differentia and have a rational relation to the legislative objective. The Court observed that the legislative intent behind the provision was to protect economically weaker tenants while promoting construction activity. The classification based on income was deemed reasonable and not vague or unfair, as it aimed to balance the interests of tenants and landlords. The Court clarified the concepts of "income" and "net income," stating that the provision's language was in line with common understanding and not overly technical.

Ultimately, the Court upheld the validity of clause (iii) of sub-section (3) of Section 1 of the Act, dismissing the appeal and affirming the decision of the High Court. The Court concurred with the reasoning of the High Court, which emphasized the legislative intent behind the provision as a piece of social and beneficial legislation designed to protect economically weaker tenants from arbitrary eviction. The Court found that the classification based on income was reasonable and had a clear nexus with the legislative objective, thereby upholding the constitutionality of the provision.